Latest news with #drugmakers
Forbes
22-05-2025
- Business
- Forbes
Regulatory Reform And AI Could Help Lower Drug Prices
A recent presidential executive order seeks to reduce high prescription pharmaceutical prices charged to Americans by raising artificially low prices paid by foreigners for those drugs. A price realignment to benefit American consumer drug purchasers by ending 'foreign freeloading' appears attractive, but it raises various legal and practical challenges. Any new U.S. Government intervention in the pharma market ideally should be done in a manner that preserves the profit-based incentive that drives costly new drug development. This is a tough task. A parallel administration focus on regulatory reform to lower the costs of pharmaceutical R&D – and thereby help drugmakers' bottom line – would be welcome. Developments in artificial intelligence may also prove helpful in promoting faster and lower cost new drug development, which eventually could translate into lower drug prices. The Drug Pricing Executive Order On May 12, 2025, President Trump released a new executive order on 'Delivering Most-Favored-Nation Prescription Drug Pricing to American Patients.' The Order's fact sheet sets forth the concerns underlying the Drug Pricing Order: The Order establishes a plan of action to address these concerns: American Drug Makers' Dilemma The peculiar global drug pricing system has been shaped by government policies that American drug makers must confront. U.S. pharma companies typically confront a single government buyer in foreign countries that uses its clout to demand low drug prices. Pharma firms then depend on high-priced American sales to support the bulk of their profits. U.S. drug makers stress that they need high profits on the drugs they sell in America to offset very high R&D costs and delays stemming from Food and Drug Administration regulatory reviews, which focus on both drug safety and efficacy. What's worse, most candidate drugs never make it to market, as a 2021 Congressional Budget Office report explained: 'Developing new drugs is a costly and uncertain process, and many potential drugs never make it to market. Only about 12 percent of drugs entering clinical trials are ultimately approved for introduction by the FDA. In recent studies, estimates of the average R&D cost per new drug range from less than $1 billion to more than $2 billion per drug. Those estimates include the costs of both laboratory research and clinical trials of successful new drugs as well as expenditures on drugs that do not make it past the laboratory-development stage, that enter clinical trials but fail in those trials or are withdrawn by the drugmaker for business reasons, or that are not approved by the FDA. Those estimates also include the company's capital costs—the value of other forgone investments—incurred during the R&D process. Such costs can make up a substantial share of the average total cost of developing a new drug. The development process often takes a decade or more, and during that time the company does not receive a financial return on its investment in developing that drug.' Practical and Legal Challenges for the Order In implementing the Drug Pricing Order, the Trump Administration will need to confront various practical and legal challenges: What is the negotiating strategy for getting foreign governments to pay more and at the same time establishing MFN prices that are well below current U.S. drug prices? What is the Administration's legal authority for requiring direct MFN sales to U.S. consumers? What is the authority for HHS MFN rulemakings? What other 'aggressive measures' could lower U.S. drug prices? Could that include allowing imports of cheaper prescription drugs, weakening patent protection, or intensifying antitrust prosecutions? Could such actions disinicentivize new drug innovation? What is the legal authority to communicate target prices to drug makers? How can you avoid making the Drug Order an exercise in government price fixing that will harm pharma markets by creating shortages and disincentivizing new drug development? Fortunately, implementing regulatory reform and supporting drug makers' application of artificial intelligence could promote the Order's goals through other means. Regulatory Reform to the Rescue Regulatory cost savings could be one feasible means to help facilitate lower drug prices domestically without undermining drug makers' to develop and market new drugs. The Trump Administration's April 2025 executive order on eliminating anticompetitive regulations provides an impetus for FDA to reduce new drug review burdens. Efforts could perhaps center on streamlining the overall regulatory process, utilizing electronic health records and mobile technologies, simplifying clinical trial protocols, and improving firm interactions with the FDA, among other initiatives. Faster drug approvals through more efficient processes could significantly lower drug development costs. They might also make it easier for firms to eliminate unfruitful development initiatives at an earlier stage. The end result would be higher drug maker profits, which could somewhat offset the disincentive effect of U.S. market price reductions. The Role of Artificial Intelligence The application of AI tools could assist pharma firms directly in reducing their drug development costs and lowering prices. A 2024 National Institutes of Health study concludes: 'The long-term implications of AI in pharmaceuticals could be transformative for global healthcare. Enhanced drug development processes will likely lead to a faster introduction of novel therapies, addressing unmet medical needs more effectively. As AI optimizes resource allocation and improves operational efficiencies, it may also contribute to lowering drug prices, thereby enhancing accessibility for patients worldwide.' The Trump Administration may be expected to support the application of AI by American drug makers, given its commitment to the reduction of barriers to the private sector's use of AI. Moving Forward The Drug Pricing Order reflects a commendable Trump Administration dedication to help financially hard-pressed American consumers. This may involve careful development of an international negotiating strategy to rebalance the global drug pricing system, through the application of MFN. It also could feature a cost-reducing strategy based on regulatory reform and AI-driven innovation. In moving forward, however, the Administration may wish to do its best to avoid price fixing or price caps that could disincentivize new drug development and harm American consumers over time.
Reuters
15-05-2025
- Business
- Reuters
French finance minister criticises Sanofi's $20 bln USA investment decision
PARIS, May 15 (Reuters) - France's finance minister criticised on Thursday a decision by French drugmaker Sanofi ( opens new tab to invest at least $20 billion in the United States through to 2030, as France aims to get more companies investing in the country rather than abroad. "It's clear it was not something that was nice to see and it was an unpleasant announcement," finance minister Eric Lombard told BFM Business TV. "It sends out a bad signal," he also said, adding he hoped Sanofi would continue to invest in France. The French drugmaker, one of the world's largest vaccine makers and a leader in anti-inflammatory drugs, said on Wednesday that it planned to expand its U.S. manufacturing capacity through direct investments in Sanofi sites, and partnerships with other domestic manufacturers. Sanofi's decision was the latest one from leading drugmakers which have been expanding their U.S. presence in response to President Donald Trump's trade policies.
Bloomberg
13-05-2025
- Business
- Bloomberg
Why Trump's Drug Price Order Didn't Rattle the Industry
Hi, it's Michelle in Washington, where I spent yesterday trying to understand what President Trump's executive order would mean for drug prices. More on that in a moment, but first ... It sure sounded big, with President Donald Trump posting Sunday that he would sign an executive order slashing prescription drug prices 'by 30% to 80%.' But the actual event had drugmakers breathing a sigh of relief.
Wall Street Journal
12-05-2025
- Business
- Wall Street Journal
Drugmakers Spared Worst-Case Drug Pricing Scenario for Now
The pharmaceutical industry's reaction to President Trump's executive order on drug prices? It could have been worse. Shares of drugmakers rebounded Monday morning after President Trump signed an executive order designed to lower what Americans pay for prescription drugs that offered pharmaceutical companies room for negotiation.
RNZ News
12-05-2025
- Business
- RNZ News
Trump to sign executive order to cut prices of medicine to match other countries
By Michael Erman and Patrick Wingrove , Reuters US President Donald Trump. Photo: AFP / Andrew Caballero-Reynolds US President Donald Trump said on Sunday he would sign an executive order to cut prescription prices to the level paid by other high-income countries, an amount he put at 30 percent to 80 percent less. In a post on Truth Social, Trump said he would sign the executive order on Monday morning to pursue what is known as "most favored nation" pricing or international reference pricing. The US pays the most in the world for many prescription drugs, often nearly triple that of other developed nations. Trump has said he wants to close that spread, but has not publicly specified how and did not provide details in his post. "They will rise throughout the World in order to equalize and, for the first time in many years, bring FAIRNESS TO AMERICA!" he said. "I will be instituting a MOST FAVORED NATION'S POLICY whereby the United States will pay the same price as the Nation that pays the lowest price anywhere in the World," Trump added. Drugmakers have been expecting an order that would focus on the Medicare health insurance program, according to four drug industry lobbyists who said they had been briefed by the White House. Reuters previously reported such a policy was under consideration. The drugmakers expect the order to apply to a universe of drugs beyond those currently subject to negotiation under former President Joe Biden's Inflation Reduction Act. Because of that law, Medicare has negotiated prices for 10 drugs, with those prices due to be put in place next year. More medicines were set to be negotiated later this year. "Government price setting in any form is bad for American patients," Alex Schriver, a spokesperson for the top US drug company lobbying group, the Pharmaceutical Research and Manufacturers of America, said in a statement when asked about Trump's planned executive order. This is not the first time President Trump has tried to tie drug prices to what other countries pay. During Trump's first term, a court blocked a proposed international reference pricing program. That proposal five years ago was projected by his administration to save taxpayers more than $85 billion over seven years, cutting into US annual spending of more than $400 billion on drugs. - Reuters
